SEC defers decision on Bitwise, Grayscale Bitcoin ETF options

The April 8 delay decision impacts proposed options trading on spot Bitcoin ETFs on the New York Stock Exchange, namely those from Bitwise and Grayscale.

The United States securities regulator has delayed its decision on whether to allow the New York Stock Exchange to offer options trading on spot Bitcoin (BTC) ETFs.  

According to the April 8 filing, the Securities and Exchange Commission’s pushback will impact options trading on the Bitwise Bitcoin ETF (BITB), the Grayscale Bitcoin Trust (GBTC) and any other trust that holds Bitcoin on the NYSE.

“The Commission finds it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change,” the securities regulator said.

The next deadline for the SEC to either approve, deny or delay the proposed rule change on the NYSE is on May 29.

The securities regulator reached the same outcome for Nasdaq last month, which requested options trading on BlackRock’s iShares Bitcoin Trust (IBIT).

Options are derivative products that provide traders leverage and let them make directional bets on the market.

If a trader thought Bitcoin’s price would rise, they could pay a premium, buy a “call option,” and agree to buy 1 BTC at today’s price in a month’s time while putting down less money than would be needed to buy 1 BTC.

If Bitcoin rises over the month, the trader could use their option, buy Bitcoin at the lower price, and maybe sell it for a profit. If it sinks, they’d likely just let the contract expire and forfeit the premium paid.

Related: Despite 23% gains, Bitcoin options traders still not bullish

Grayscale’s CEO, Michael Sonnenshein, is one of two people who wrote to the SEC requesting the rule change to be approved.

In a Feb. 28 letter, Sonnenshein argued there’s no reason to knockback options trading on the spot Bitcoin ETFs as the SEC has already approved Bitcoin futures ETFs and spot Bitcoin ETFs on the NYSE.

“The natural next step is the approval of options on spot Bitcoin ETPs.”

The approval of options for spot Bitcoin ETFs would also “contribute to a robust and healthy market,” Sonnenshein also said in a Feb. 5 X post.

NYSE filed a 19b-4 form proposing options trading on Bitcoin ETFs on Jan. 12, while Nasdaq and Cboe made their own proposals on Jan. 19 — nine days after the SEC approved spot Bitcoin ETFs on several stock exchanges.